US 10YR FUTURE TECHS: (M5) Sold Hard Off Highs
- RES 4: 113-22 1.382 proj of the Apr 11 - 16 - 22 price swing
- RES 3: 113-04 76.4% retracement of the Apr 7 - 11 bear leg
- RES 2: 112-20+ Intraday high
- RES 1: 112-18 1.0% 10-dma envelope
- PRICE: 111-31 @ 16:37 BST May 1
- SUP 1: 111-07+ 20-day EMA
- SUP 2: 110-16+/109-08 Low Apr 22 / 11 and the bear trigger
- SUP 3: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
- SUP 4: 108-21 Low Feb 19
Treasury futures reversed off the intraday high on firmer-than-expected ISM Manufacturing data. Prices saw pressure toward the first real support at the 20-day EMA of 111-07+, below which 110-16+ marks the Apr 22 low and next notable downside level. Recent gains resulted in a break of 111-25, 50.0% of the Apr 7 - 11 bear leg. However, the lack of follow through here shows the bullish S/T trend signal may be under threat. The bear trigger remains 109-08, the Apr 11 low.
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US DATA: Texas Services Sector Activity Pulls Back Sharply, But Prices Contained
Dallas Fed's Texas Service Sector Outlook Survey general business activity index collapsed to a 16-month low -11.3 in March from positive 4.6 prior. This is just 3 months after a 33-month high 10.8 and mirrors other regional Fed surveys that have seen a sharp deterioration over the past couple of months.
- The outlook is deteriorating as well, with the future general business activity index falling to -1.1 from positive 12.3, down over 32 points in just 2 months. "Other future service-sector activity indexes such as employment and capital expenditures also fell but remained in positive territory, reflecting expectations for slower growth in the next six months."
- One contrast with other regional services surveys though: price pressures diminished. Current prices paid dipped 1 point to 27.0, reversing February's rise, with prices received at a 4-month low 5.2 (7.9 prior).
- That said, there were multiple anecdotes included with the survey that suggested that higher tariffs could impact pricing in future - though the outlook was uncertain at this stage.
FED: US TSY 14D AUCTION: HIGH RATE 4.250%; 96.51% AT HIGH
- US TSY 14D AUCTION: HIGH RATE 4.250%; 96.51% AT HIGH
- US TSY 14D BILL AUCTION: DEALERS TAKE 31.07% OF COMPETITIVES
- US TSY 14D BILL AUCTION: DIRECTS TAKE 4.11% OF COMPETITIVES
- US TSY 14D BILL AUCTION: INDIRECTS TAKE 64.82% OF COMPETITIVES
- US TSY 14D AUCTION: BID/COVER 3.43
EURGBP: BofA Recommend Buying EUR/GBP 0.83 Put Options
Bank of America recommend buying one-month EUR/GBP 0.8300 puts, citing market complacency over the EU's relative exposure to trade risk over the UK. They also note positive seasonality effects for GBP over April.
- They see the EU at greater risk from US tariffs due to the UK's very small goods surplus with the US, while their prop flow data shows funds buying the EUR ahead of the announcement tomorrow, after selling the EUR in previous weeks.
- BofA note that FTSE-listings repatriate overseas earnings for dividend purposes over April, and while the impact has faded due to structural factors after the Brexit vote, they see a return to normality for the seasonality effect ahead.
